SHANGHAI, Feb 8 (Reuters) - Offshore investors increased their holdings of Chinese government bonds at the fastest rate for 16 months in January, boosting foreign holdings to their highest yet.
Overseas investors’ holdings of Chinese treasury bonds rose by 60.5 billion yuan in January, or 10 percent, to 667 billion yuan ($105.37 billion), Reuters calculated from China Central Depository and Clearing Co (CCDC) data.
It was the fastest percentage increase since September 2016, and brings the proportion of Chinese government bonds held by foreign investors to 5.5 percent, the first time it has exceeded 5 percent.
Offshore holdings of Negotiable Certificates of Deposit (NCDs), short-term debt favoured by small banks, rose by 29.9 billion yuan in January to 170.3 billion yuan, Reuters calculated from Shanghai Clearing House data.
Data from Shanghai Clearing House and CCDC, China’s primary bond clearing houses, showed that total offshore holdings of all Chinese bonds in the interbank market rose by 98.3 billion yuan to 1.2 trillion yuan in January, the 11th consecutive month of increases.
As of January, offshore bondholders held 1.9 percent of China’s outstanding interbank market bonds. High yields and a strengthening yuan encouraged offshore bondholders to increase their holdings by 43.5 percent last year.
China’s yuan hit a 2-1/2-year high against the U.S. dollar on Wednesday before weakening on Thursday.
The yield on 10-year Chinese treasury bonds was at 3.898 percent on Thursday, Reuters data showed.
$1 = 6.3302 Chinese yuan Reporting by Andrew Galbraith; Editing by Eric Meijer